Graham Stack in Kyiv -

Ukraine's major agribusinesses, thirsty for international financing, are heading a drive towards better investor relations, according to a new survey of company websites by Kyiv-based Concorde Capital. Yet even the best still suffer serious shortcomings.

Times were that agriculture in Ukraine was so backward that it seemed to live on in a parallel socialist world of its own. Things have changed - Ukrainian agriculture majors not only rank among Ukraine's most transparent - but also have by far the best internet presence among Ukraine corporates, according to a survey by Concorde Capital.

In a ranking of how good Ukrainian companies are at online investor relations - maintaining websites that provide investors with the information they need in real time - agriculture companies dominate the top 25, taking 15 of the top 25 spots for online investor relations.

Although the overall top spot went to oligarch Rinat Akhmetov's DTEK power holding, places two to six were all occupied by agriculture holdings: egg producer Avangard, grain producers Kernel, Alpcot Agro and Ukrproduct, and chicken producer MHP. "This reflects the leading role that Ukraine's agribusiness is playing in terms of recent placements and bond issues," says Concorde's Brad Wells, who authored the study.

But while the result at first glance points to Ukraine's agriculture rocketing away from its socialist legacy in the vanguard of transparency, the underlying reasons are more complex and reflect the impact of the socialist legacy on corporate finances.

Ukraine still does not permit the "alienation" of land plots, meaning land has to remain in the hands of the peasants who inherited it from Soviet communal farms. Agricultural majors have to lease land instead of owning their basic means of production, and so they find it hard to raise long-term bank financing. "A Ukrainian agriculture company may not actually really own anything," explains Renaissance Capital's head of communications, Konstantin Golowinski.

This in turn forces agriculture companies to leverage revenues and turn to equity and debt markets for financing, and thus develop a far higher level of investor relations. Hence the glossy all-singing-and-dancing websites.

Lack of finance

The leap from post-Soviet agricultural collapse to shiny online transparency has been incredibly fast, and is definitely a huge improvement. At the same time, the best suffer from some serious shortcomings.

Take the website Concorde singled out for special consideration (one of the study's website evaluators called it "hands down the best site I reviewed for investors"), that for Avangard. For all the wealth of information about the company on offer in real time and in attractive format, there are some notable lacunae.

The website bio provided for the Avangard CEO Nataliya Vasylyuk fails to note that she is the younger sister of the majority shareholder and chairman of the board, Oleg Bakhmatyuk, putting a question mark over management board independence.

The website also states that Avangard "does not produce and does not plan to produce" its own grain - grain costs constituting 80% of egg production costs. Bakhmatyuk's majority stake in Avangard was however transferred to his grain producing company Ukrlandfarming, one of Ukraine's largest, in 2011, a fact the website does record. Ukrlandfarming itself does not have a website currently at all. Avangard has previously denied purchasing any grain from its sister company.

Another recent transparency glitch among agriculture companies involved grain producer Agroton, which is in the top 25 of Concorde's survey. When Agroton's initial auditor complained in May that there was no documentation for a large part of the company's 2011 stated revenues, Agroton simply chose a new auditor and fired their head of investor relations. The episode is, however, documented on their website.

A more general caveat regarding agricultural transparency: Ukraine's government plans to lift the moratorium on land sales in a way that could introduce new restrictions on buying land. This could in turn prevent companies from exercising buyout options for land they currently lease, while undermining their leasing arrangements. So if transparency is a result of lack of land ownership as bank collateral, forcing companies to turn to financial markets, then it may be skating on thin ice if the land market changes abruptly.

For London eyes only

The Concorde survey also shines a spotlight on how even Ukrainian companies demonstrating good online corporate relations focus exclusively on international investors: domestic investors have simply dropped off the radar screen, with the Ukrainian capital markets regarded as good as dead.

Some of the best websites from the point of view of investor relations are even English-only. "Conference calls without local Kyiv dial-in numbers are also a common occurrence," notes another evaluator that helped with the survey, Dmitry Koshevoy of Interfax-Ukraine.

Even where one asset in a corporate group is international listed and has a great IR website to show for this, this does not rub off on its domestically listed sister companies, which continue to show no interest in investors, according to the survey.

This may still change if Ukraine allows duel listings - for internationally listed companies to list in Ukraine as well, something CEO Oleg Tkachenko of UX Exchange, the country's leading share trading platform, is lobbying hard for. "With the introduction of dual listing, issuers that already have an established IR strategy will pay attention to keeping domestic investors informed," hopes Tkachenko.

No surprises, meanwhile, that the overall winner of the ranking - narrowly pipping Avangard - is Ukraine's richest man Rinat Akhmetov's DTEK power group, with his metals holding Metinvest coming in at sixth place and his First Ukrainian International Bank rated just after at seventh. All of these are lining up for potential major IPOs, and Akhmetov has long since installed a slick Western PR and IR outfit to run his show.